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How Business Owners may be able to Reduce Tax by using an S Corporation

February 18, 2020
by Merline & Meacham, PA
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Do you conduct your business as a sole proprietorship, wholly owned LLC or partnership? If so, there may be a way to cut your tax bill by using an S corporation. The self-employment (SE) tax is imposed on 92.35% of SE income at a 12.4% rate for Social Security up to $137,700 for 2020 and at a 2.9% rate for Medicare. An extra 0.9% Medicare tax is imposed on income exceeding $250,000 for married filers and $200,000 for singles. But if you conduct your business as an S corp, you’ll be subject to income tax, but not SE tax, on your share of the business income. But the S corp must pay you a reasonable salary. Contact us if you’d like to discuss conducting your business as an S corporation.

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    • Our Firm
    • Practice Areas
      • Business Entities
      • Charitable Planning
      • Employee Benefits/ERISA
      • Estate and Gift Taxes
      • Estate Planning
      • Income Tax Law
      • Mergers and Acquisitions
      • Non-Profit/Tax Exempt
      • Probate/Estate Admin.
      • Tax Controversies
      • Wills and Trusts
    • Attorneys
      • Robert E. August
      • Jonathan R. Colao
      • Phillip J. Martin
      • Keith G. Meacham
      • W. Verne McGough, Jr.
      • Andrew D. Merline
      • David A. Merline, Jr.
      • Marie Monroe
      • J. Aaron Nelson, Jr.
      • Douglas B. O’Neal
      • David M. Thompson
    • Firm News
    • Resources